Two of Victoria’s largest infrastructure projects have been lambasted by the state’s auditor general as it concluded the business cases for the Andrews government’s flagship Suburban Rail Loop and Melbourne Airport Rail projects did not support “fully informed investment decisions”.
The reports, tabled in parliament on Wednesday, came as the Victorian government on Tuesday published the business case for Melbourne’s long-awaited airport rail link – due to be completed in 2029.
Melbourne Airport is at odds with the government’s preference for an elevated airport station, arguing an underground option would provide a better passenger experience and “safeguards” for future connectivity.
The auditor general’s report into the business cases concluded the content was neither sufficient nor provided in a timely manner on four of the transport projects it reviewed.
The report said the Department of Transport and Suburban Rail Loop Authority had not provided the state government with the full business case for the project, only its first two stages in April 2021, meaning the departments did not “demonstrate the economic rationale for the entire project”.
“They have told us that they had no plans to do so,” the report said.
It said not providing the entire business cases meant advice to the government was not “sufficiently comprehensive”.
The report also noted the early development of the Suburban Rail Loop was “atypical” for the largest infrastructure project in the state because no transport agencies were involved in its planning and development.
Regarding the Melbourne Airport Rail project, the auditor general found the business case completed by the Department of Transport and Rail Projects Victoria late last year was “too late to inform key government decisions on the project”.
However, the public sector agencies involved in the business cases refuted the auditor general’s assessment, describing it as misleading. They said the Melbourne Airport Rail project was large and complex, and the Suburban Rail Link was beyond merely a transport project and would include city-shaping works.
The discount rate – a buffer used to estimate future projects costs – in the economic appraisals of the Suburban Rail Loop and Melbourne Airport Rail was set at 4%, after being approved by the transport and infrastructure minister, Jacinta Allan, and accepted by the treasurer, Tim Pallas. This is despite the department of treasury and finance recommending a discount rate of 7% – a benchmark also used by Infrastructure Australia.
Additionally, the auditor general concluded the benefit-cost ratio of the Suburban Rail Loop to be 0.51 when calculated in line with the department of treasury and finance’s guidelines and excluding wider economic benefits used by government agencies in its business case that said the ratio is between 1 and 1.7.
Speaking to reporters on Wednesday morning, Allan said the Suburban Rail Loop and Airport rail were “big, multi-year projects” that required an approach that was “appropriate for projects of that size and scale”.
“When you have a standard business case approach, it’s really an approach that has to be tailored to the project that’s being delivered,” she said.
A second auditor general report found that the department of treasury and finance did not report on the state’s major projects performance in a transparent way, which hindered parliament and the wider community’s ability to hold public sector agencies to account.
The report recommended the department of treasury and finance maintain a publicly available dashboard to show how major projects – worth over $100m – are performing. The data would include an estimation of the total investment and the completion date for each project.
Suburban Rail Loop is set to be a key battleground of the November election after the opposition pledged to shelve stage one to instead spend the money on health.
The proposed 90km underground orbital railway line, running between Cheltenham in the south-east and Werribee in the south-west via Melbourne airport, has been described as the state’s biggest public transport project.
The auditor general reports were among 52 reports tabled in parliament on Wednesday – the last parliamentary sitting day before the Victorian election in November.
